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Volga Baikal AGRO News Update on the Market of the Russian Wheat !!!
Experts expect new record grain prices.
Russian wheat is more expensive than the wheat of competitors.
This season, prices for grain, primarily wheat, are at a high level, but we will see their further growth, industry experts say. General Director of the Institute for Agricultural Market Studies (IKAR) Dmitry Rylko, during the Russian Meat & Feed Industry-2020 conference “Meat & Feed Industry: Markets in a New Reality” organized by Agroinvestor, recalled that two weeks ago there was another record of grain prices in ruble terms in ports, which means that in the coming weeks we will have a new record for all grain prices.
“If wheat prices demonstrated active growth this season, a similar trend was not observed for barley, but two weeks ago, record prices were set for it, and, according to our forecasts, they will continue to grow in the coming month,” Rylko said. “There is a possibility that soybeans will also reach record levels in prices in the coming months.”
According to the head of the analytical center Rusagrotrans Igor Pavensky, the price of wheat with 12.5% protein reached a record level of 17.8-18 thousand rubles per ton (CPT-Novorossiysk). At the same time, there are few offers from the south with delivery by road, and rail deliveries are fully scheduled for October and November. FOB prices have reached $ 250 / ton, now Russian wheat is more expensive than competitors by $ 5-7 per ton.
“The record prices we are seeing now are a temporary phenomenon, since in the first half of this season, Russia remained the only major supplier of wheat to the world market,” the Vice President of the Russian Grain Union emphasized during his reportAlexander Korbut. He added that fodder wheat in comparison with last year has risen in price by 4 thousand rubles / ton, but this rise in price was mainly due to the depreciation of the ruble – if it had not changed, then the price increase would have amounted to only 1.1 thousand rubles/t.
Among the possible reasons for the high prices for Russian wheat, Korbut named the expectation of the introduction of export quotas in the second half of the season. “In response to this situation, exporters are trying to sell the maximum amount of grain at maximum prices in the first half of the season,” Korbut said. Bans always lead to a sharp rise in prices – we saw such a situation last year with sunflower, the same is now observed with wheat, he added.
According to Korbut’s forecast, by the end of the year we will indeed see an increase in wheat prices, and then Australia will enter the market with decent volumes of grain. “Already now, Australian wheat is being contracted at a FOB price lower than the Russian one,” he clarifies.
Rylko added that, of course, livestock breeders will lose from the rise in prices for grain, in particular for barley, but he also believes that it is wrong to restrain exports to stabilize prices. “A possible solution in this situation could be the introduction of a subsidy to compensate for the rise in the cost of compound feed,” he suggested.
There is no grain shortage in Russia, the risk of which officials call the reason for the introduction of export quotas, according to Korbut, and there will not be. This year, 131 million tons of grain will be harvested in Russia – this is the second result after a record harvest after an abnormally high harvest in 2017, noted Igor Pavensky. According to him, the gross yield of wheat in weight after processing will be 84 million tons, barley – 21 million tons, which is the second record figure after 2008, corn – 14 million tons – despite the drought in the South, its harvest is only 0. 3 million tons will be lower than in 2019.
“For wheat, out of twenty producing regions, the decline occurred only in six, primarily in Krasnodar and Stavropol, as well as in a number of regions of Siberia. At the same time, in the Center and the Volga region, there was an increase in yield of 13 million tons, which more than compensates for the mentioned decrease, “Pavensky said.
Grain exports, according to Pavensky, are at a record pace, in August and September its volumes amounted to 5.8 million tons and 5.7 million tons, respectively, primarily due to wheat and barley. In October, high grain exports will continue, the expert predicts. “Our shipments are growing, first of all, due to an increase in supplies to the countries of Southeast Asia – Thailand, Pakistan, Bangladesh, the Philippines, Sri Lanka, where the quality of our own grain is not high. Europe has also increased grain imports from Russia,” – he said.
